Why is DSL cheap and T1 expensive?

Apparently my braincells had too little to do tonight and I got off onto the track of thinking: "If I pay $75 for my 1.5 mbps x 768 kbps DSL connection, why then is a T1 $400-600/mo?"

Well, once those neurons fired off, of course some other neurons fired back with the answer. And it's that answer I'm gonna share.

Why is DSL (and cable modem) so cheap? Simple - contention.

Contention - (n.) Conflict that arises when two or more requests are made concurrently for a resource that cannot be shared.

So what does that mean? Well, in the simplest terms, think of contention as the last spoonful of ice cream from a container. It can only be enjoyed by one person. Your DSL connection is the same way. Your (and my) little DSL pipe is connected into a big internet pipe at the phone company (usually a DS3 that's connected in turn to another larger pipe to the internet somewhere else).

Another way to visualize it is connecting multiple water hoses to the same spigot on your house. You can only run so many at a time before the water pressure drops substantially.

In the case of our DSL, that water pressure drop is the same effect as our internet connections slowing down. For the most part, cable modem users notice it first... that's an engineering challenge due to how cable is run to different neighborhoods.

What does all this mean? Well, the phone company (or your cable company) buys a nice big internet connection. As long as no one is using it, it's really fast. The problem comes in that we're not guaranteed any set speed (go read your contract, you're in for a rude awakening). So the phone or cable company can share that one really big pipe with was many people they want to. So if you have 10,000 people in an area all sharing the same connection and trying to hit websites, download music and check email at the same time things can slow down - sometimes dramatically. That's contention - we're all contending for a share of a limited resource. This is also called oversubscription. It's the same concept that leads to "all circuits are busy now, please try your call again later" when making phone calls. The company has a set number of phone lines and internet speed to share. If more people try to use it than they can accommodate, some people get shut out or slowed down.

Now, since the phone companies own most of the really fast internet connections - or at least the wires or fiber by which they are connected around the US - people with DSL don't see this as often as people on cable modems (since the cable companies have to buy internet connections from some telephone company somewhere).

How is that different from a T1? With a T1, instead of sharing that really big pipe with thousands of other people, you have your own private connection into the backbone of the internet. The T1 carrier (if they're a tier 1 carrier) is usually going to guarantee that you will always have 99.9% or higher of your speed available to you. This means you're not fighting with all the other people in the neighborhood to get to the internet. (Now once your traffic hits the internet all bets are off b/c you can't control how your traffic gets to or from the website or other computer you want to talk to.)

And because you're not sharing the connection with so many other people, your T1 skips some of the equipment that would normally sit inbetween you and the phone company if you were on DSL. That makes a T1 feel "snappier".

What does that all boil down to? For residential users, DSL or cable modem is probably more then adequate for most people. For business users, you have to determine how much your internet connection is worth to the productivity of your business. If you can live without it, DSL or cable modem will probably suffice. But if you rely on email or the internet for making profit, closing deals or supporting customers, then a T1 is in order for you. The extra monthly expense is just a cost of ensuring you'll always be able to do business efficiently and reliably.

When good and bad legislation meet, people lose!

David Deans on Texas House Bill 789

Will the Texas legislature knowingly pass a bill that may harm their constituents' ongoing participation in the Global Networked Economy, and negatively impact the future competitiveness of every business within the state?

That's the puzzling conclusion regarding the cause and effect of Texas house bill HB789 if passed. The following is an assessment of each of the main arguments and the associated counterpoints:

Why would any government entity want to invest in telecommunications infrastructure?

There is a clear precedent that government has always exercised the right to invest public money in infrastructure projects for "the public good". For centuries, governments have invested in building waterways, railways, highways and most recently airport facilities. Supporting national, regional and local investments in telecommunications infrastructure is merely an evolution of previously rationalized economic public policy. Telecom infrastructure is the enabling commercial transportation media of the Global Networked Economy.

Can telecommunications infrastructure become a part of existing Municipal Public Works?

Again, there is a precedent for municipal governments to deliver services that are in the public interest. This extends beyond transportation infrastructure to utilities such as water, electricity, trash removal and other essential civic services. Access to competitive telecommunications infrastructure is essential for all Texas communities to prosper, and it is therefore a logical extension of the provision of public works facilities. Access to broadband is becoming essential.

Should local governments provide similar services that compete with private business?

Once again, there is a similar precedent for publicly funded municipal bus and light rail services to be in direct competition with private taxi, limousine and shuttle services. Meaning, competitive coexistence is proven to create consumer choice -- given the availability of various options with associated value propositions, we know that discerning consumers will choose different services to meet their own individual needs. Texans are entitled to choose a public or private telecom provider. Besides, when compared to other forward-looking states, if HB789 is passed then Texans will become relegated to "second-class U.S. citizens" that essentially have fewer options than residents in other states. Granted, this is not the intent of HB789, but the unintended consequence.

Is it unfair when government provides no-fee Internet access, while carriers charge a fee?

Non-profit municipal telecom services that are provided without charge are not really "free" to its users – clearly, this is not a case of semantics. All users of telecommunications services are subject to paying approximately twenty percent of their existing service bill in the form of various federal, state and local government taxes (and associated subsidies). Municipal governments are now finally applying that revenue windfall to directly benefit those people who pay those taxes, by providing a tangible public service. Moreover, it’s already recognized that the American public collectively own the available radio spectrum, and so municipal wireless services simply ensure that this community asset is being used in the public interest. This isn’t a gift; it’s an inherent right.

Is it unfair that all taxpayers must subsidize municipal telecom services, when most people who don’t own a computer may never use the service?

Since the people who will use the municipal telecom service will likely be the same people who use the most commercial (fee-based) telecommunications services, they therefore already pay their "fair share" of the tax burden. Consider this situation to be similar to gasoline taxes – people that use the roads and highways the most ultimately are the ones who pay the most for the ongoing construction and maintenance of those very same resources. Again, the precedent is clear, apportioned taxes have often been applied in this very same manner.

If bill HB789 were passed, would it adversely affect the progress of the wireless sector in Texas?

Outlawing government’s involvement in the provision of broadband telecom services will set a negative precedent that has vast implications – it could undo past positive events. As an example, the State of Texas was nationally recognized as a forward-looking state when it approved the budget for DPS to install and maintain no-fee Wi-Fi services at state highway rest stops (other states are following Texas’ lead). Furthermore, the nationally acclaimed Austin Wireless City Project, an organization that provides free broadband Wi-Fi network installation and maintenance for local business venues across the Texas capital, is a model of American grass-roots entrepreneurial ingenuity at its very best (other cities are following Austin’s lead). By contrast, the passage of HB789 is regressive policy that not only undercuts past progress, but also potentially holds back further economic prosperity. The bill would prohibit the public-private partnership in Granbury, Texas – the nation’s first multiple-use citywide wireless broadband network. In Granbury, the city has contracted Frontier Broadband to deploy a network for public safety AND public access, a first in the United States. In Corpus Christi, a similar citywide network has been deployed for a variety of municipal applications including automated gas meter reading, public safety and in the near future, public access.

Isn’t it an exaggeration to say that HB789 will ultimately harm the Texas economy?

Telecom infrastructure is an enabling foundation for the ongoing growth of both traditional and electronic commerce. Texas needs to deploy as much broadband service offerings as possible, in order to effectively compete with other states that are already trying to attract their unfair share of telecom-enabled commerce. This is a key point -- don’t underestimate the significance -- Texas communities are in a race to build out their telecom infrastructure to match (and hopefully exceed) that of other growing markets. In comparison, HB789 is equivalent to suggesting that the Texas legislature would gladly pass a bill that will hold back the advancement of Texas state highways, or Texas community airports. In summary, bad economic policy is proven to negatively impact investment, the creation of jobs and ultimately people’s overall quality of life – put simply, handicapping Texas municipal broadband infrastructure investment options will harm all Texans.

Compared to other forms of public infrastructure, is wireless really a good investment?

All publicly funded investments should be subject to due diligence, as part of an ROI assessment. However, if the Texas legislature continues to support public funding for the construction and maintenance of other essential forms of infrastructure, then it is surely a clear case of faulty logic to outlaw the funding of essential public telecom infrastructure, without legal cause. Furthermore, wireless infrastructure investment is very prudent, with a compelling return on investment, when compared to other forms of legacy infrastructure. See Table 1 for a cost comparison.

Broadband Infrastructure Costs per Kilometer vs. Other Infrastructure Costs

Table 1

Road: $550,000
Water: $195,000
Electricity: $145,000
Gas: $85,000
Fiber Optics; $22,000 - $35,000
Coaxial Cable: $12,000 - $20,000
Copper Wires: $7,000 - $15,000
Wireless: $3,500 - $15,000

[Source: Upper CanadaNet as cited in the Canadian Broadband Taskforce Report, 2001 page 46]

If you live in Texas you need to get involved!

ACT NOW: Write State Legislators

ACTION ALERT

Now is the time to tell our Texas state representatives that we want the anti-wireless provisions removed from HB 789. We especially need to send this message to the representatives on the House Committee for Regulated Industries. They are holding a public hearing on the the bill this Tuesday, which will determine whether the anti-wireless provisions remain.

Continue reading "ACT NOW: Write State Legislators" ...

Fraud artists con firm out of customers' data

WASHINGTON - One of the nation's biggest information services has begun warning more than 100,000 people across the country they may be targets of fraud, following disclosures the company inadvertently sold personal and financial records to fraud artists apparently involved in a massive identity theft scheme.

ChoicePoint Inc. electronically delivered thousands of reports containing names, addresses, Social Security numbers, financial information and other details to people in the Los Angeles area posing as officials in legitimate debt collection, insurance and check-cashing businesses. (after you've pulled a copy of your credit report, read more)

Budget motel chain offers free long distance, Wi-Fi

A small motel chain named Microtel is trying to change the fact you've never heard of them by offering both free long distance and Wi-Fi, reports the Associated Press. While it may take some time, free hotel/motel broadband is something many analysts believe is inevitable.

Free HBO and continental breakfasts aren't the amenities that have Microtel Inn & Suites guests chattering, sometimes for hours on end.

It's the free, unlimited long distance calls and wireless high-speed Internet service.

The economy-budget motel chain is now offering those services as well as free unlimited local calling in all its guest rooms at its 265 locations nationwide.

Would you let this guy near your kids? We'll now he has one of his own! Oh my. Proud Father, David Young.

Proud mother... Mrs. Heather Young. Please take pity on Mom and go buy her something nice from their Wal-Mart baby registry. 20 diapers every day and a half is quite expensive!

Welcome Miss Lillian Margaret Young to Planet Earth. 8:37, 5lb 10oz, 19.5 inches long. 23 days early. And apparently she takes after her daddy's side (balling/whiner). You can see more pictures online here.

When it's time to go....

From Pa: "Carried {senile aunt who has no children} to Person {Memorial Hospital} then Duke {University Medical Center} last night about 10:30. She has had a massive heart attack. 4 major arteries {blocked} - stints nor balloons can work. BP was 205 over 90 before meds started to settle her down. She is stable under meds, without them she is pulling out the IV's. Pray that we are doing what is right. We have not let them put her on a machine. She has said many times she wants to go to {her husband who passed away a few months ago}. That is another good reason not to go for quad by-pass. Her mind is not right for a lifelong fight. I pray God will comfort her and show us if it is time to let her go."

Who will replace Powell and Why it matters!

As it stands now, it appears the most likely replacement for departing FCC chief Mike Powell is commissioner Kevin Martin - who if you recall had several spats with Powell in the past over broadband deregulation. While both support deregulation, Martin seems to have a shred more consumer advocacy in his blood, and wasn't comfortable at the speed at which Powell was tearing down competitive guidelines. Whoever replaces Powell has a long list of controversial issues to tackle - well covered in this TMCnet piece.

Why does this matter?

1. It's an easy choice for Bush. Too many people on Capitol Hill wouldn't go for an exact Michael Powell duplicate. Martin is seen as a bit stricter than Powell and more willing to enforce regulations already on the books instead of ignoring them. And as an existing commissioner, Martin can be designated as chairman without having to be confirmed by Congress - which would prevent giving Democrats a chance to drag out the issues and political hot potatoes such as media consolidation.
   
   
2. Martin won't be making any sweeping changes. All of us looking at the current telecommunications landscape are already screaming "look, Ma Bell is resurrecting herself!". But under Martin this is likely to continue without much fanfare. He'll probably remain "hands-off" with VoIP - which is good - but our nations municipalities are likely to find themselves bound, gagged and handcuffed should they consider deploying municipality funded broadband. By maintaining the status quo, Martin will ensure that the rates paid by middle America for phone service and internet access will continue to steadily rise and the 'digital divide' will continue to widen as carriers cherry pick residential neighborhoods for fiber deployment while leaving businesses and less profitable customers holding a bag of very expensive poop.
   
   
3. Digital TV will continue to flounder. As it should! I'm all for digital TV and I'm all for HDTV. Both of them exist in my home. But that doesn't mean I think the family across the river who earns less than $20,000 a year and supports 4 children without welfare or Medicaid assistance should have to buy a new $650 television, $250 antenna and $100 receiver unit. Martin isn't expected to push the roll-out schedules any faster than the 85% rule... which should in effect keep pushing out the 'drop-dead' date for broadcasters. Now, I do think all the full power broadcasters who received free airwaves more than 10 years ago and have made profits on that free gift should be required to have digital simulcasting in place for 100% of their broadcast day by 2006. Doubt that will happen with Martin though... he's just a beholden to corporate interests as Powell. ({begin rant} You DID know that the TV broadcasters got their 6 mhz chuncks of *extremely* valuable VHF and UHF spectrum without paying a single dime, right? And that they've never paid a single dime for it since they started broadcasting. And that they're dragging their feet as hard as possible to keep from giving it up to other communications carriers who will have to pay billions for it! {end rant})
   

Consider yourself warned!

I don't know which one scares me more... that bald head... or the pseudo-sticking out the tounge expression. Ps... Isn't her hair great?

They call themselves "The Mixon Clan". Personally, I think they look more like a montley crew! Can you guess which one is the younger sister?

Resorts, hotels and properties getting on the internet

Lately I've been seeing lots of resorts, hotels and other service properties looking around for how to provide their guests with broadband access. So, I thought this would be a good time to publish a public primer on the subject covering most of the items I usually discuss with property owners via phone or in person. This information is a "large hand" overview, please contact Anyion Services for a consultation for your specific location.

There are a couple major considerations when wiring a service property:

1. How will guests access the system?
2. What infrastructure, if any, is already in place to facilitate the roll-out?
3. How will the host property get its access to the internet?
4. Is the property owner capable of managing their own hardware?
5. How much budget is available for hardware?
6. Who will do the initial installation and setup?
   
7. How much will the gateway internet access cost the property (monthly recurring expense)?
8. Will guests access the service for free or will they be required to pay?
9. Who will provide day-to-day technical support to guests?
   
10. Does the property management need it's on independent network which is segregated from guests?
    

Let's begin this discussion with the 3 basic questions we always need to answer first:


How will guests access your system?

For all the property owners I've spoken to, the initial answer to this question always some version of "wireless". While wireless is a technology that should certainly be considered and is usually part of every installation, it's not the only access technology that should be considered. In most installations, it is also helpful to provide guests with the ability to connect in a wired fashion using a plain ethernet jack (RJ45). This can be accomplished in several ways. Properties which have existing telephone wiring infrastructure in the building can use various flavors of small DSL equipment or Cisco's ethernet over Cat3 product line to provide ethernet drops in guest rooms, remote buildings, bungalows, etc. Especially for remote buildings, if there is existing telephone wiring I always recommend using it instead of trying to do a point-to-point wireless shot. Wireless always requires more upkeep than wired solutions - especially outdoors.

What infrastructure, if any, is already in place to facilitate the roll-out?

As I mentioned above, one of the existing resources that can be leveraged is existing telephone plant wiring. Other items to consider are towers on which antennas can be mounted, tall trees for the same, and outdoor power outlets. When planning a wireless roll-out, one of the most time consuming aspects - aside from mapping the terrain - is figuring out how to power the outdoor access points and antennas. Even for an all indoor installation this can still be a major problem since there are rarely power outlets where you need them - i.e. in attics and overhead crawl spaces.

In campus settings there are often no power drops near where outdoor or eve mounted access points need to be placed... which often means a considerable about of electrical wiring. For all brick or all cement block buildings it may actually be cheaper to pay the power company to drop an additional electrical circuit and meter in certain places on the property instead of trenching, boring or drilling for new wiring.

How will the host property get onto the internet?

This is usually the most difficult question to answer. For city hotels and B&B's this is usually not a hard thing to accomplish since DSL and cable modems are often available in those locations. For resorts, however, it can be a much more expensive and time consuming proposition due to usually being in more remote areas. By nature a resort is designed to be away from the hussle and bussle of a city... which means they are also further away from the technological resources needed to put them on the internet. In many cases this means the only option for internet service at their property is a standard business internet T1. For smaller properties the monthly expense (usually $500-850 per month) can be a bit hard to swallow. And for the most remote properties business T1s may be completely unavailable or cost prohibitive {i.e. over $1200/mo} (especially if the local phone company is a small, independent company). In those circumstances, the properties may only be able to get internet access via satellite or long range microwave service. Note: Properties should use caution when looking at satellite connections. If you frequently host business travelers, they will be unhappy with accessing their corporate systems via satellite because the VPN (virtual private networking) software used to access their corporate networks is mostly useless over a satellite connection due to the latency (response slowness) of satellite connections. Also, expect to spend $250 or more per month for a satellite connection which will be used by multiple people. Starband a similar services are highly restrictive about how many concurrent connections can be made over their network.

The Sugar High Cometh!

Speaking of pounds - How many pounds of Nancy's Homemade Fudge is that? And who volunteered to clean the ceiling after the geeks in the office got ahold of it?

Someone just had to offset the candy didn't they?!?

Oh my, I don't know which one is bigger. That fruit basket of the "love pounds" hiding under that Tarheel blue shirt! What, Adam, did ya get married and give up? Now here we'd gotten them the perfect birthday gift (fudge and chocolate) for that fabulous sugar buzz... and someone had to go and make them feel guilty by sending something healthy like fresh fruit!

Whoa! Adam's getting old... good thing he has his T1 business to fall back on when he loses those good looks.

Build your own telco for under $6k

"George Ou shows how with the help of open-source VOIP server Asterisk you can start your own telecommunications company for under $6000 '...you can build a phone system that can support 72 analog telephones or fax machines, 100 IP hard or soft phones on site or remote, a T1 line to the public telco for 23 simultaneous external PSTN connections, multiple IP-based IAX trunks to multiple remote offices for seamless toll-bypass 4-digit dialing, IVR, and almost unlimited voice mail for everyone – for under $6,000 in a 1U chassis. Such a price point is easily 10 or more times cheaper than a commercial alternative,' writes George." (Thanks /.)

The only thing George forgets is that getting the bandwidth installed to share the connections with other offices over the internet can be an expensive proposition in itself. Before you get too excited, you might want to check out DS1 prices in your local area for both voice T1s and intenet T1s.

The effects of Verizon FIOS on business internet users

Being in the DFW Metroplex, we've had an opportunity to observe how Verizon is handling their FIOS installations first hand. And I'm the first person to admit that I get a little giddy thinking about what they will some day be offering.

But that's not the focus of my thoughts today. I want to look at something else... how businesses are being affected by the rollout.

Talking to all the people online and in person who have FIOS going into their areas, I came to an interesting observation. It seems that Verizon has specifically engineered the new fiber roll-out to avoid as many business customers as possible. Now when you consider that the average business is paying 2x as much per copper wire in the Verizon network as residential customers you can see a profit motive there.

So I have an interesting hypothesis... Verizon plans to move as many of the residential customers in their network over to fiber to get them on higher ARPU products (i.e. cable TV) to boost their revenues and to get rid of many of their high maintenance copper loops (i.e. long runs of copper into subdivisions). At the same time, Verizon intends to force as many business customers into "legacy" (and more expensive, more profitable) solutions - T1, DS3, etc. - as possible to extract every possible cent from their copper network before they start to dismantle it.

With the residential focus of FIOS and similar solutions from other ILECs, it seems we're going through another round of "ignore the business customer b/c if they really want something they'll pay for it anyway". This is the same thing most businesses who called Comcast or Time Warner for cable modem or TV service 3 years ago ran into. Businesses screw up the financial calculations when they "upgrade" themselves to less costly technologies.

I don't want to scream conspiracy here... but if you consider what would happen to Verizon's financials if all their business internet customers (T1 and higher) moved to FIOS you can see they certainly have strong incentive to maintain the status quo as long as possible. (Why else do you think they moan so loudly about the CLECs sucking away all their profitable customers?)

What does this mean for today's business? Well, the ones still on dialup will either move to DSL or do nothing. Those businesses who are growing and have a real need for bandwidth (especially for hosting applications, high volume email, or anything requiring much upload speed) will be forced into T1s. And those customers who outgrow T1s - which many are already doing rather quickly - will find themselves looking at DS3s and co-location. All the while they'll be asking the carriers and sales folks "why can't we get this cheap fiber stuff". The carriers won't answer directly... but you'll hear a faint voice in the background whisper "because we're a monopoly, we've paid off most of the politicians, and we don't have to give you anything unless we want to".

Are we headed for a trainwreck? Where American homes have faster internet connections than the average business? I hate to think about it, but if the current state of affairs continues, the answer will be yes.

So what's a business internet user to do about keeping their connection pricing reasonable? A good start would be taking a look at the current offerings in your area using our real-time T1 and DS3 price engine http://www.anyionservices.com/ .
}- Davoice

"Dude! They're not for my wife after all. They're for me! Someone sent me flowers for my birthday!!!" Imagine this for a guy who programs stuff for t1 lines and T-1 connections all day with ShopforT1.